"Queen asks guests to give her three reasons why Britain should remain
in Europe"

- The Telegraph, June 21.

"Visium's flagship fund was down 9.3% this year through May, while
its competitors were up 0.2%."

- Business Insider, June 18.

"Why We Can Expect Cripplingly Higher Oil Prices In The Near Future"

- OilPrice.com, June 20.

"Pimco Is Out With an Urgent Warning On US Commercial Real Estate"

- Business Insider, June 20.

Perspective

At one time, the term "cross currents" referred to the tidal transition from
an expansion to a contraction. It was unsettling to the establishment. In economic
jargon of the day, policymakers were "not rocking the boat" in attempting "to
keep the recovery going". All the while, of course "fighting inflation".

You had to be there.

Now they are rocking the boats while trying to boost inflation because that
will prompt a business expansion.

Veteran traders have always considered that central bankers have had little
control over financial destiny. Cyclical changes in the yield curve and credit
spreads occur regularly. Despite the best efforts of central bankers to prevent
the change.

Now, cross currents in the credit markets are setting up a tidal change that
again could be devastating. With this, the general public will finally realize
that interventionist policymaking is a stupid waste of money.

Stock Markets

Reasonably good momentum was accomplished going into May. The limiter, so
far, has been some key moving averages. On the positive side, there has been
the "all-onemarket"
thing. Crude up and dollar down makes the Fed feel good. Also helps the stock
market.

The ChartWorks "Election Year Model" for this year, called for a correction
focused upon June followed by a brief rally. This would be into a "Rolling
Top". The big
"Rounded Peak" was accomplished last summer.

Crude oil soared to 51.71 two weeks ago when a correction began.

The DX set its low at 93.29 at the same time and has been stabilizing.

Both seem to be setting up for change.

In a punishingly volatile world, our objective is to look for change. This
contrasts with policymakers who in pushing for constant growth, have exaggerated
natural instability. In trying to prevent setbacks a massive positive feedback
has been imposed. Negative feedback is always there to correct excess.

Usually discovered in the fall of the year.

As we have noted, central bankers are to financial markets as tornados are
to trailer courts.

It is time to review some leading indicators.

Going into last year's peak, the Transports provided the warning and in May
it was that the bull market was over.

On this year's outstanding rebound, the Trans have not confirmed the highs
for the DJIA.

While the senior indexes are not quite as high as reached last year, the decline
in real earnings takes the latest valuations to the moon.

Banks (XBD) led at the highs in 2007 and were coincidental in last year's
high.

On this index, the 50-Week ma has guided the play.

After providing support on the way up, it was taken out in July 2007. We used
this as guidance and the equivalent take out occurred in August 2015.

And then there has been the second significant rally in the bear, which was
turned back by the 50-Day in September 2008.

This has been used for this year's rebound out of trashed conditions in January.
The rally could make it to the 50-Week and that would limit the move.

The high for BKX was right at the 50-Week at 71 in April. In the middle of
May it reached 71.53, which was little above the declining moving average.
The subsequent low in June was below the May low, which makes the financial
sector rather precarious.

For the Transports, the 50-Week provided support from 2010 to 2015. And it
has been limiting the rebounds on the way down. As with the banks, TRAN has
taken out the May low.

Poor action in leading sectors is not good for the rest of the market. The
senior indexes have been inflated by financial engineering as well as by central
bank buying.

Representing the broad market, the action in the NYA has been guided by the
65-Day ma. The failure in 2002, 2008 and in 2015 was marked by taking out the
key moving average.

On the two previous bears, the second rebound was significant and turned back
by the 65- Week ma. These were clocked in March 2002 and May 2008. On this
one, the second rebound made it to the moving average in late April and the
NYA has been trading above and below the declining moving average since.

The rebound high was 10468 in early June. At 10490 now, the May low was 10120.
This level is both compelling and critical.

Now, what could turn it down?

A firmer dollar, weaker commodities, widening spreads and the resumption of
curve flattening.

As with previous tidal changes, no alteration in Fed policy is needed.

Currencies

Brexit, Brexit, Brexit!

In two World Wars, England expended considerable blood and treasure in defeating
European experiments in authoritarian government. With incredible irony, European
authoritarians are taking over England. Albeit with less violence than when "William
the Bastard" imposed feudalism in 1066.

The dollar is still building for a rally and once past the referendum it should
turn up. We could change the above Swiss headline to "Only lunatics would want
to stay in".

Stock Market and Earnings

Since January, stocks up and earnings down.

Unusual.

For how long can the divergence run?

Hong Kong House Prices

The high was in August at 143.46.

The March number at 125.42 was posted in June.

The decline is now more impressive that the one in 2008.

"We've Defeated the Shale Revolution"

Fracking is the technological revolution for crude.

In the early 1900s, miners learned how to produce from low-grade copper
porphyry deposits.

In the 1960s and 1970s it was lower-grade Carlin gold and gold leaching.

The opinions in this report are solely those of the author.
The information herein was obtained from various sources; however we do not
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